Exam 14: Special Tax Computation Methods, tax Credits, and Payment of Tax

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S.income tax liability attributable to the income earned in all foreign countries.

The earned income credit is refundable only if a tax has been withheld.

All of the following statements regarding self-employment income/tax are true except:

Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.

The earned income credit is available only to taxpayers with qualifying children.

In the fall of 2013,James went back to school to earn a master of accountancy degree.He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000.His Lifetime Learning Credit is

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of net self- employment income.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000. (a)What is Lara's Additional Medicare Tax for 2013,if any? (b)What is Lara's deduction for AGI for the Additional Medicare Tax?

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

Reva and Josh Lewis had alternative minimum taxable income of $350,000 in 2013 and file a joint return.For purposes of computing the alternative minimum tax,their exemption is

Max and Alexandra are married and incur $5,500 of qualifying expenses to care for their two children,ages 2 and 5.Max's earned income is $35,000 and Alexandra's earnings from a part-time job are $5,000.What is the amount of the qualifying expenses for purposes of computing the child and dependent care credit?

The child and dependent care credit provides relief for working taxpayers who pay for care for younger children or an incapacitated dependent or spouse.

Sonya started a self-employed consulting business in the last part of the year and earned $40,000.She had been employed as manager in a consulting firm prior to starting her own business and had earned $125,000. (a)What is Sonya's self employment tax for 2013? (b)What is Sonya's deduction for AGI for the SE tax?

When a husband and wife file a joint return and both have self-employment income,the self-employment tax must be computed separately.

All of the following are allowable deductions under the alternative minimum tax except

Nonrefundable tax credits

Hawaii,Inc.,began a child care facility for its employees during the year.The corporation incurred the following expenses: What is the amount of Hawaii's credit for employer-provided child care?

In computing the alternative minimum taxable income,no deduction is allowed for

During the year,Jim incurs $50,000 of rehabilitation expenditures in connection with a certified historic structure used in his business.The adjusted basis of the structure was $40,000 at the time the rehabilitation began. a.What is the amount,if any,of his rehabilitation credit for the year? b.What is the depreciable basis of the rehabilitation expenditures?

The present AMT applies to individuals,corporations,estates,and trusts.

Rex has the following AMT adjustments: -Depreciation of real property acquired in 1996 using MACRS is $22,000 while depreciation for AMT purposes is $15,000. -R&E expenditures amounting to $60,000 are expensed. The net adjustment is